A Complete Guide to Tax Credits for Self-Employed Individuals in Ireland

Understanding and applying the available tax credits can substantially reduce the tax liability for self employed individuals in Ireland, which can lead to significant savings. This comprehensive guide provides a detailed overview of the leading tax credits applicable to the self-employed, including landlords, freelancers, and subcontractors

Key Tax Credits Available for Self-Employed Individuals

1. Mortgage Interest Tax Credit (2023 Onwards)

Introduced in 2023, the mortgage interest tax relief allows self-employed homeowners to deduct a portion of the increased interest paid on their home mortgages from their taxable income. This credit is worth up to €1,250.00 per year and is instrumental for those looking to reduce their tax obligations effectively.

2. Tax Break for Landlords (2024 Onwards)

A new tax break for landlords was announced as part of Budget 2024 and will enable property owners to claim deductions on the income earned from rented properties.  This new tax credit is aimed at supporting the rental sector and incentivising landlords to remain in the rental market.

3. Earned Income Credit 

The Earned Income Tax Credit (EITC) is a tax credit for self-employed people in Ireland. It reduces your tax bill based on your earned income. Much like the PAYE credit for salaried workers, the EITC can help lower your taxes. This makes it a valuable benefit for self-employed individuals and levels the playing field between the self-employed and employees from a tax paid perspective. 

4. Rent Credit for Tenants

Tenants, including those who are self-employed and rent their homes, can also benefit from a rent tax credit which can make a significant difference to their annual income tax return. Single private renters in Ireland can claim a Rent Tax Credit of €750 annually. Married couples filing jointly can claim up to €1,500. Also, the credit can be claimed by parents if a child is in rental accommodation while attending university.

5. Medical Expenses

Claiming tax relief on medical expenses not covered by insurance is another benefit for self-employed individuals. Tax relief at 20% can be claimed on medical expenses incurred from doctor visits, hospital treatments, prescription medicines and many more.  Tax relief can also be claimed on Non-Routine dental expenses, while tax relief at 40% can be claimed on Nursing Home expenses or employing a carer in the home. 

6. Remote Working Credit

The rise of remote working has led to the introduction of the work-from-home credit, which provides deductions for expenses such as heating, electricity, and broadband costs directly associated with working from home.  This credit can only be claimed against PAYE income from employment. 

7. Pension Payments

Contributions made to pension schemes are eligible for tax relief at your marginal (higher) tax rate of up to 40%. This encourages retirement savings and reduces current taxable income, providing a dual benefit for self-employed individuals.  The contributions are based off earned income only and not passive income such as rental income. The percentage of income one can contribute to a pension increases with age, and 25 % of your pension pot can be drawn down tax-free upon retirement. Pensions are the most efficient way to save on taxes. 

8. Tuition Fees

Self-employed individuals can also claim deductions for tuition fees paid for third-level education courses for themselves or their dependents, thus supporting continuous personal development and education.  The credit applies to both full-time and part-time courses.

9. Dependant Relative Tax Credit

This credit, which is worth €245.00 per individual supported, helps those who care for dependent relatives, including elderly parents, relatives abroad or relatives with disabilities, offering reduced tax liabilities to help compensate for caregiving expenses.

10. Home Carers Tax Credit

If you’re married and one parent elects to stay at home and care for children, you may qualify for the home carers tax credit, which is worth €1,800. This offers a significant yearly tax reduction and support.

11. Joint Assessment

Opting for joint assessment with your spouse can lead to significant tax savings for married couples or civil partners, allowing the couple to share tax credits and rate bands effectively.

12. Single Parent Credit

This credit assists single parents with the financial demands of raising children on a single income, providing essential financial relief.  It can be worth up to €2,550 per year. 

13. Incapacitated Child Credit

Parents of incapacitated children can claim this credit, offering relief to families dealing with significant medical, educational, or care expenses.  The credit is worth €3,500 per child in 2024.

Maximising Your Self-Employed Tax Benefits

To fully benefit from these tax credits, it’s crucial to maintain accurate records and understand the specific eligibility criteria for each. Knowing which tax deductions you can claim can greatly impact your financial planning. 

Tax Returns Plus offers expert guidance and services tailored to help self-employed individuals navigate the complexities of tax filing. All our clients are provided with a bespoke template, which outlines the procedure to claim any tax credit available to the client.  For personalised advice and assistance with your tax returns, complete our short form now to receive a quote and find out how our team can help you with your Inheritance tax return this year.

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